Select People – Cayman Islands Top 100 Employers Survey
(February 2009)
Select People Offshore Recruitment polled the Top 100 Employers in the Cayman Islands between the 3rd and the 20th February 2009 to gauge the sentiment of employers in the Islands regarding the global economic downturn.
We spoke to just over one hundred Managing Directors, HR Managers and Hiring Managers and asked them their opinion on the downturn, its impact on the Cayman Islands and their outlook for the next year.
The companies chosen were a cross-section of banks, fund administrators, law firms, retailers, construction & property firms, auditors, hotels and professional services firms that accurately reflect the employer demographics of the island.
Below are the detailed results of this poll which show that the outlook is not as bleak as many may have thought, with numerous firms seeking to expand their workforce and making bold predictions about the years ahead.
Question 1: Financial Secretary Ken Jefferson has predicted that the Cayman Islands economy will grow by 1.4% during 2009. Do you think that the local economy will grow or shrink in the coming year?
The Cayman Islands government forecast just 1.7 per cent growth in its growth domestic product for calendar year 2008, and 1.4 per cent growth for 2009 (source: Caymanian Compass, Dec 31st 2008). Effectively the Financial Secretary predicted that the Cayman economy would grow at a similar rate in 2009 to that of 2008 (a drop of only 0.3% in GDP growth.
An overwhelming majority of respondendts voiced their disagreement with this prediction. In fact only 7.1% believe that the economy will grow at all, with 77.1% believing that the economy will shrink (i.e. go into recession), relative to 2008.
Question 2: How long do you think it will take for the global economy to improve?
91.4% of respondents are of the opinion that the global downturn will not reverse itself for at least another year, which pretty much writes off 2009 as a year of negative or flat growth.
The majority of business leaders seem to believe, however, that the economy will improve during 2010 (54.3%) with just over one third (37.1%) of the opinion that the economy will not begin to improve until 2011.
Question 3: Which one of the following do you think is the best way for a company to reduce its labour cost?
Whilst companies often solve the issue of reducing their labour cost with multiple strategies, we asked respondents to provide us with what they felt was the best way that a company should approach this challenge. More than half (57.1%) advocated a policy of not replacing staff as they leave. In the context of the Cayman Islands workforce, this invariably referred to work permit holders who chose to leave at the end of their contracts. Many employers stated that they had already imposed this restriction and had asked the remaining staff to absorb the duties and responsibilities of departing staff members.
Employees may take some comfort in that only 28.6% of those surveyed, which includes CEO's, HR Managers and those senior executives that are responsible for hiring decisions, advocated redundancies as the best option to solve this growing problem. The introduction of a pay freeze was cited as the second most popular solution, something that has no doubt already been implemented in many companies across the islands. Reduced hours for staff was the least popular response, perhaps because it can be difficult to implement amongst salaried professionals.
Question 4: At the end of this year, do you expect to employ more or less staff than you do name?
With so much talk of job losses and company closures it may come as a surprise to many that over 70% of employers stated that they will employ the same number or more staff at the end of this year than they do now. 29% of employers expect to employ less staff; a figure that is statistically almost equal to the number who expect to employ more staff (31.9%). Although the survey results do not seem to show much room for growth in 2009, it would appear that employees are relatively safe, with almost an equal number of firms expecting to create jobs as those that will be letting people go.
Question 5: Compared to last year, do you plan to spend more or less on staff training in 2009?
In light of the fact that the majority of companies were planning to retain their exisiting staff or hire new ones and that most employers would favour a policy of not replacing staff as they leave if they needed to reduce their labour costs, we felt it was important to understand the impact that this would have on employers' investment in their staff training for the coming year. It was encouraging to find that 80% of employers intend to maintain or increase their spend on staff training during 2009. Training budgets are often the first to be cut when a company is trying to minimise losses but it often conflicts with a requirement to get more out of your existing or remaining staff if you plan not to replace people as they leave or you plan redundancies.
Question 6: Has your company hired any new staff in the last 3 months?
The period November - February is often the quietest time of year for recruitment as year-end hiring freezes are imposed and employees resist resigning before they are paid their annual bonuses in Q1. One would expect then that the last 3 months would have been the slowest few months in recruitment in many years yet over half of all of the employers polled (51.4%) stated that they had hired new staff during this period.
Question 7: Under what circumstances would you typically use a recruitment agency to fill a vacancy?
One upside of an economic downturn for employers is that it is now an employer’s job market and the pool of people available for any job is considerably better now than it was 12 or even 6 months ago. However, 64% of employers always use agencies to find senior, professional staff and nearly all respondents (98%) said that they still use recruitment agencies in certain situations, namely:
1) for temporary staff (particularly where a hiring freeze is in place and temporary staff allow them to work around the freeze)
2) roles that cannot be filled with an on-island candidate and they need an international search
3) when recruiting for senior staff
4) to recruit for specialised roles
5)to save time when a position needs to be filled urgently and the cost of delaying is more than a recruiter's fee.
Question 8: What specific roles, if any, do you continue to have trouble filling?
While 46% of employers said that they have no problem filling any positions it means that 54% sill struggle to fill certain roles. By and large these roles are for professional people with specific skill sets that are unavailable on island. The downside of a recession for employers looking to recruit is that people are less likely to change jobs in an uncertain market so it is harder to prise away that key employee from another company resulting in employers still having difficulties finding certain staff. The following were popular examples given:
Trust Officers, Senior Level Executives, Paralegals, Compliance Officers, IT Systems staff, Private Bankers, Senior Business Developers & Underwriters, amongst others.
Question 9: What do you think is the single most important thing that the Cayman Islands government can do to stimulate the local economy?
43% of employers believe changes in immigration policies are paramount!
This question prompted the most passionate comments amongst respondents resulting in many interesting and creative ideas. That being said, there were a number of common themes, foremost being the issue of immigration and work permits with 43% of respondents saying that changes were needed in this area in order to stimulate and maintain the local economy. The suggested means in which the government could introduce changes varied from relaxing the 7 year rollover policy to only giving work permits to qualified professionals.
The majority of people that cited Immigration reform as the single most important thing that Government can address in order to stimulate the economy feel that if the Cayman Islands are to continue to be successful there needs to be an overhaul of the immigration department including the introduction of policies that are pro – business. Many people emphasised that pro-business can mean pro-Caymanian job creation and that removing the rollover policy and a simplification of the work permit process for professionals would encourage the expansion of businesses in Cayman and attract further investment, which in turn benefits all Caymanians.
11% of employers specifically suggested the reduction of work permit fees as a way of helping the local economy. A common theme in the answers was that Cayman is not an easy place to do business in terms of cost, convenience and access to and retention of the right staff.
A Reduction in government duties would encourage consumer spending.
19% of those surveyed believe that reductions in Government duties would act as a stimulus to the local economy. Ideas included the temporary reduction of stamp duty and taxes on consumer goods to encourage spending amongst the population.
The Government can’t do anything to help!
7% of employers feel that there is very little that the government can do as the islands’ economy depends largely on tourism and financial services which are driven by issues outside of the control of anyone in the Cayman Islands.
Other ideas – Casinos for the Cayman Islands
Employers felt that the Cayman Islands needs a dedicated development authority that would actively promote the Cayman Islands as a place to invest and do business. The offshore model has now been replicated in many other jurisdictions and in order to continue to attract companies the benefits that Cayman offers need to be sold to potential banks and other financial services companies.
Many felt that more could be done in the arra of tourism order to stimulate immediate revenue. The promotion of stay-over tourism could be encouraged through lower cost bundled holiday packages to get people to the island where they can then spend their money amongst local businesses. Other suggested innovations included the development of more golf courses and a number of casinos to distinguish the Cayman Island tourist product from other Caribbean destinations.
Below are some further quotes and ideas from Cayman’s employers:
“Amend (the) fixation on squeezing Caymanians into every position. Local companies don't employ Caymanians - they employ Jamaicans and Filipinos so (it) is the expat companies that employ Caymanians yet it is getting more and more difficult to do business and operate for those companies. (We are) losing talent through current restrictions.”
“Get rid of all non professional expats off island. Give permits only to professionals with degrees. Locals would not flip burgers for $3 per hour so wages for these jobs would have to go up and there would be more jobs for locals. Housing issues where there are 10 people to a room would go away. Also professionals should not be rolled over.”
“..... the government could look at stimulating new industries - e.g. film - attract movies to Cayman with incentives. Do likewise with other industries.”
“Need to ease barriers to entry. The Cayman model has been replicated in many other offshore jurisdictions plus with countries tightening regulations there is also competition with onshore service providers. Cayman needs to woo companies again and reduce obstacles. Fee structures are very high and attracting and keeping good staff is difficult because of the permit issues. Government need to set up an agency to go and attract companies, CIMA need to lead along with the Chamber.”
“Encourage and promote the islands as the place to do business. Improve regulation and transparency. Reduce the Civil Service”
“Bring in some kind of funding scheme for new businesses or training”
“Decrease bank lending rates; create more green jobs by changing environmental laws; tax businesses to pay for infrastructural development such as road works and maintenance”
“Try and reduce the cost of doing business: for the next 6 months encourage duty concessions for building materials and reduce fees for start-ups. Also reduce stamp duty to 2 or 3% to encourage the property market. i.e. take the initiative to encourage business activity.”
“Improve education; give resident status to expats in order to attract them to long commitment to the community.”
“Provide jobs for locals through construction projects”
“Make it less expensive to run a business in the CI. The cost of doing business is growing all the time”
“Make it easier and quicker to issue work permits and relax the 7 year rollover for professional staff”
“Remove the rollover policy”
“Because Cayman is so reliant on a number of specific industries, things are in some ways out of our hands. The financial markets , tourism & real estate are all suffering badly but it is the result of international issues. They could reduce permit fees but the benefit would be long term, in the short term it would just take money out of the economy. In the short term tourism is probably the best bet to stimulate the local economy - through packages, promotions.”
“Need to look towards progressive legislation in the financial services sector. Cayman has always stayed ahead of the curve, entrepreneurial regarding changes in legislation.”
Continue progressive immigration legislation that facilitates business (not just cost, people don't mind paying for quality)”
“More golf courses and some casinos! Make Cayman a golf destination or generally do something to distinguish the tourism product. Improve the Immigration policy, more flexibility might allow employers to commit more to the island and expand more.”
“More flexibility on immigration policies”
“Decrease work permit holders on island”
“Make it easier and quicker to issue work permits and relax the 7 year rollover policy for professional staff”
“The government has very little impact, market is king. Market forces will dominate; government actions won’t alleviate the situation”
“Carry on with capital expenditure plans that are in place”
“Reduce duties and taxes on goods temporarily to help consumers”
“Make it less expensive to do business in Cayman (less tariffs, fees, stop raising work permit fees)”
